The focus this week on how much Goldman Sachs has paid its staff has obscured the fact that it has an awful lot more of them than it used to. Goldman increased its headcount by 19% in the past 18 months, adding 5,600 staff in a campaign to grab market share outside of the U.S. and push into asset management.

Goldman has increased its headcount by a net 5,600 since March 2009 to 35,400. At that time the bank had a headcount of 29,800, a three-year low as it cut roughly 10% from payrolls to survive the financial crisis.

Over the same period, the investment banking division of J.P. Morgan Chase hired just 261 workers, less than 1%. Morgan Stanley increased its headcount by around 19,200, but more than 18,000 of these positions came from the creation of its retail brokerage joint venture with Citigroup. Excluding this venture, Morgan Stanley’s payrolls increased by around 3%.

Naturally, neither JP Morgan nor Canary Wharf want to comment and why would they? Why would a bank like JP Morgan commit to a new 1.5 million square feet HQ, in a grand gesture showing the U.K. government it’ll stay in London no matter what, at a time when the country blames the banks for everything?

Don’t get me wrong, I don’t think the banks are blameless, but I can tell you that Switzerland is looking sweeter than ever and London is not what it used to be. I believe that banks were hoping for a change in attitude when the new U.K. coalition government took over, which hasn’t really happened yet.

So if I had to call this one, I wouldn’t expect JP Morgan to make a decision any time soon.

Investors sent European bank shares higher Monday after the Basel Committee on Banking Supervision detailed new bank-capital requirements. But the short-term satisfaction in having some uncertainty removed shouldn’t override the longer-term outcome that banks are likely to become a lot less profitable and that customers could bear much of the cost.

The head of the Basel Committee, Nout Wellink, said hundreds of billions of euros will need to be raised by banks to meet the new rules, through retained earnings or new capital, limiting the amount of money available for dividends or employee bonuses. It was never in doubt that a better-capitalized and therefore safer banking system would cut into these payouts, as will a host of other planned and proposed rules from domestic and international regulators.

Yet shareholders appeared to be delighted with the rules, mainly because they could have been far tougher. They are also comforted by the lengthy timeline for implementation, between 2013 and 2019, which UBS analysts called “surprisingly accommodative.”

“Chuck Prince has essentially confirmed that risky behavior drives out prudent when risk is rewarded.” But did Prince ask regulators to intervene? Concludes with a look at what action the Fed should take.

(via Reuters) “There have been many critiques of the financial system in the wake of the global crisis, blaming its structure for the severity of the problem. But it’s taken until now for an old-school Marxist to come along and co-opt all of those critiques as a call to embrace communism.”

“…not only do Wall Street firms screw their clients (hardly a novel revelation these days) but a large group of firms allegedly conspired to price-fix on guarantee investment contracts, a product used by government issuers to park cash raised via bond issues before they deploy it.”

“…private equity as a whole has long followed what economists and market watchers refer to as the J-curve: A slow, methodical start followed by a nice pick-up later on – low torque, but turbo-speed later.”

(via WSJ.com) “A perusal of N.Y. Attorney General Andrew Cuomo’s complaint against former Bank of America CEO Kenneth Lewis and former finance chief Joe Price seems to support Thain’s version of the events surrounding BofA’s troubled acquisition of Merrill Lynch.”

JP Morgan has increased the level of remuneration to its staff by 21% over the past year, although it has nearly halved the compensation ratio–the level of staff pay compared to revenues–as the US investment bank kicks off the 2010 results season.

Overall, compensation from the investment bank increased to $9.33 billion in 2009, compared to $7.7 billion in the previous year, when the division had made made a $1.2 billion loss.

The US bank will then properly kick-off the 2010 bonus season on Monday, along with rival Goldmann Sachs, when they officially tell their staff what their bonuses will be for the past year.

Nasdaq Dubai hoped to lure companies and investors with light regulation and tax perks, but it hasn’t been able to expand its reach beyond local players. Other light-touch regional exchanges have also been dismayed to see companies move on once they are better-established and able to meet the stricter conditions of London’s main market.

Among the reasons: London’s flourishing network of brokers – including JPMorgan’s Cazenove, whose buyout late last year by the U.S. bank was another vote for London, with its relatively stable regulatory regime, and a reputation for sound laws and fairness. Its institutional investors are also still among the most powerful in the world, and average punters are pouring their money into stock funds to get a piece of the equities rally.

Even the prospect of higher corporate and personal taxes may not dim London’s glow too much.

For decades, investors in cash stocks (as opposed to derivatives) have had to pay stamp duty on their U.K. transactions. Research suggests the tax may curb trading volumes and raise companies’ cost of capital. Yet there’s little evidence that it leads either companies or investors to take their business elsewhere.

Despite talk of U.S. banks threatening to shut their London offices and hedge fund managers decamping to Geneva, London will continue to be a major financial center for decades to come.

The same five banks have ranked as the top global mergers and acquisitions advisers since 2003, according to Thomson Reuters, suggesting that despite the tumult of the past two years, the crisis has done little to shake up the pecking order of leading advisers.

Morgan Stanley, Goldman Sachs, JP Morgan, Citigroup and Bank of America Merrill Lynch all featured in the top five in Thomson Reuters’ year end global M&A league tables from 2003 to 2009, writes Liam Vaughan at Financial News.

The lack of movement at the top flies in the face of expectations that the crisis would lead to the reordering of the banking sector.

An important priority for 2010 must be a re-examination of of how the Western banking system works. For there to be so little pain felt among these institutions, relatively speaking, something is deeply awry.

Mountains of national debt must be repaid and quantitative easing has to be phased out.

As John Colson, a consultant at Greenwich Associates said in a report on the stable nature of investment banking relationships earlier this year: “Our findings reveal two things: one, that corporate banking relationships are sticky; and two, that companies – especially large companies – just don’t have many options”.

JP Morgan’s new head of European cash equities, Alan Carruthers, nearly doubled his shareholding in Cazenove last year. This means he’ll pocket more than £2 million extra dosh when Caz is taken over JPM, than if he’d maintained his stake at its previous level.